LONG BEACH, Calif. — Negotiators for dockworkers and port management are trying to avoid a repeat of the costly 10-day lockout in 2002 that shut down ports on the West Coast and disrupted shipments to vendors and retailers.
Although the pact doesn’t expire until July 2008, a proposal is being floated to bring West Coast port management and labor officials to the table this year. The prospective talks, and the efforts to stave off logistical and financial havoc, were a focus of the Trans-Pacific Maritime Conference here on March 5 and 6.
The developments were viewed as a sign that the negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association, which represents port employers, might be resolved quickly. The association initiated the proposal, and union officials said they would respond after consulting members.
“Any work disruption must be regarded by both parties as unacceptable,” Jim McKenna, president of the PMA, said in a speech to some 1,300 shippers, carriers, port workers, logistics providers, manufacturers and retailers, including Nordstrom, Charming Shoppes, Claire’s, Dollar Tree Stores, Hennes & Mauritz, Limited Brands and Sears Holdings. “The relationship between the PMA and the ILWU has improved.”
The stakes are high for the PMA and the 42,000-member West Coast dockworkers’ union. After the Sept. 11, 2001, terrorist attacks and the 2002 lockout, which ended after President Bush invoked the Taft-Hartley law, both sides have heightened awareness about the importance of port issues.
“With scrutiny comes added pressure,” McKenna said.
Any work stoppage at the almost 30 West Coast ports, including the nation’s largest at Long Beach and Los Angeles, could cause severe damage to a domestic economy that suffered an estimated $15 billion blow from the 2002 action. More than $260 billion a year in trade moves through the pair of Southern California ports, along with more than 40 percent of the nation’s cargo in containers.
Since 2002, imports from the trans-Pacific, most of which arrive on the West Coast, have taken a larger share of the U.S. total, hitting 73.5 percent in 2005, according to Port Import Export Reporting Service’s maritime research service.
This story first appeared in the March 13, 2007 issue of WWD. Subscribe Today.
Goods from Northeast Asia, dominated by China, represented 81.9 percent of the trans-Pacific import trade in 2005 and 77.6 percent of the trans-Pacific export trade, according to the export reporting service. From 2001 to 2006, trans-Pacific imports from China have grown at an average rate of 36 percent annually, a growth rate second only to Vietnam’s explosive 165 percent average annual growth.
As port traffic is expected to double in the next decade, McKenna stressed that expanding capacity was essential. With no land available at the West Coast ports for the task, he pointed to advanced technological systems as the only solution.
“The anticipated growth can only be accommodated by making ports more efficient,” McKenna said. “The PMA and ILWU must agree on operations technology.”
Technology was a central topic of the 2002 negotiations. Port management asserted the automation of gates, yards and vessels would enhance the flow of information and speed containers through ports. The union has resisted technological systems that cause job losses.
In the 2002 contract, port management was given the green light to move forward with specific technological systems such as cameras and optical character readers that record container and license plate numbers. In return, the union won higher pay and benefits. During the conference, the figure often cited was an average annual union salary of $140,000 plus 2006 benefits of $48,000. Some union members argued that the amount failed to take into account pay lost from injury-related work absences.
The union’s worst fears about technology-induced job cuts have yet to materialize. Conference panel moderator Bill Mongelluzzo, West Coast editor of the Journal of Commerce, noted that in 2002, union and management forecast that 400 marine clerk jobs would be eliminated. However, the total number of clerks’ slots has actually increased.
“Technology has enabled volume growth,” said McKenna, and with it, created new jobs.
Peter Peyton, secretary and treasurer of the ILWU Local 63, insisted that the union “has never been opposed to systems.” He said opposition arose when technology was needlessly implemented without an understanding of its application in ports operations.
“It is not that the technology is taking jobs away,” he said. “It is really, where is the technology making business better?”
With the next round of significant advances still years away, it is expected that the next round of labor negotiations will proceed comparatively smoothly.
“I don’t see any single major issue that is so contentious that either side will draw a line in the sand,” Mongelluzzo said.
Unlike in 2002, the contract talks have been preceded by a period of relative labor peace. Fresh leadership at the PMA, where McKenna replaced former association president Joe Miniace, and the union, where Robert McEllrath succeeded ILWU international president James Spinosa, has contributed to a softening of labor-management tensions.
“They are more circumspect in regards to their behavior,” Mongelluzzo said of both men.